HHS resources: learn more →

Property tax changes and new build exemptions

Photo by Partha Narasimhan on Unsplash

This week the Government has provided more guidance on exemptions from new tax rules introduced in March 2021.

With the Government's focus to increase housing stock, the latest announcements haven't come entirely unexpected. Consultation papers confirmed that the new builds are likely to be exempt from new tax rules. It looks like property investors would still be able to claim interest as a deduction and the bright-line test will be kept at 5 years.

What surprising is how broad the definition of the "new build" is.

It looks like a "new build" will not go beyond a brand new house built on a vacant piece of land. The property should also be considered a "new build" when:

  • a self-contained dwelling (with its own kitchen and bathroom) which had been added to residential land (this can be stand-alone or attached to the existing property)
  • a house replacing an existing house.
  • a house renovated to create two (or multiple) houses
  • a commercial property converted into apartments

It is still unclear how long the new build exemptions are likely to last (e.g. 10 or 20 years) and if they will apply to subsequent owners.

The consultation papers also suggest that the exemption will apply to the following:

  • the family home
  • the owner-occupier with flatmates
  • commercial properties (e.g. motels)
  • employee accommodation
  • farmland
  • care facilities (e.g. nursing homes)
  • land outside New Zealand

Under further consideration are short-stay accommodation that is not substitutable for long term accommodation (e.g. student accommodation and serviced apartments)

Members of the public are encouraged to make submissions until July 12.
This change will take effect from October 1 2021, for properties bought after March 27, 2021.

The information contained in this article is exclusively for promotional purposes. It does not in any way constitute legal advice and should not be relied upon as the basis for any legal action or contractual dealings. The information is not and does not attempt to be, a comprehensive account of the relevant law in New Zealand. If you require legal advice, you should seek independent legal counsel. myRent.co.nz does not accept any liability that may arise from the use of this information.


What the community has to say

Our services

Free to get started
Easy setup
Cancel anytime

Advertise your rental
from $40

Includes a listing on Trade Me, realestate.co.nz, OneRoof, trovit.co.nz, and Homes.co.nz.

Learn more

Tenant checks
for $35

Rent with confidence and make informed decisions with comprehensive tenant tenant checks.

Learn more

Self-management software from $10/month

Save time, money & your sanity with our clever self-management system. Start with a free trial.

Learn more

Not quite ready to sign up?

Subscribe to our free newsletter. We’ll keep you up to date on all things myRent, important tenancy law changes, and new tips on maximising your returns.